Owning and operating a small business truly embodies the spirit of America. The entrepreneurial endeavor represents autonomy and self-reliance instead of depending on the government to provide for you.
Unfortunately, the past two years have been devastating for small businesses in America. In 2020, the economy was brought to a stand-still due to pandemic restrictions. This particularly impacted small businesses who aren’t as resilient as large corporations with massive balance sheets.
As the economy reopened from said restrictions, this should’ve been good news for small business. However, we are now faced with high inflation and an economic slowdown that is negatively impacting entrepreneurs across the country.
According to a recent survey from the small business network group Alignable, there are a record number of small businesses unable to cover their basic expenses to stay afloat. The survey indicates that 41% of U.S.-based small business could not pay their rent in full and on time in November, setting a record for 2022.
This is causing a notable increase in delinquency rates that increased 7% in October. Several reasons are cited for this economic hardship including high inflation, reduced consumer spending, and higher rent. All of these go hand-in-hand.
Alignable further elaborates on these drivers:
- Higher rents for 52% of SMBs (up 1% from last month)
- Declining monthly revenues: in October only 34% of SMBs reported earning half or less of their pre-COVID income. But this month, that figure is 7% higher: 41% are generating half or less of what they earned monthly prior to COVID
- Reduced consumer spending. In October, 59% of SMB owners said consumers were purchasing less than the month prior. In November, that number skyrocketed to 73%
- 60% of SMBs say inflation’s really hurting their business right now (even though the inflation rate is a bit lower than it was)
- One indicator of the toll inflation is taking on businesses is a steep drop in the percentage of small businesses that are fully recovered, earning as much if not more than they did monthly prior to COVID. The percentage was 24% in October, but dropped to 14% in November — an all-time low.
Representative Marjorie Taylor Greene commented on the dire financial situation on her Twitter account stating:
“This is devastating. Owning a small business is the American dream and they are being destroyed by our government leader’s bad decisions.”
“A notable 57% of beauty salons said they couldn’t make rent as well as 45% of gyms, 44% of retail and 44% of restaurants.”
This is devastating. Owning a small business is the American dream and they are being destroyed by our government leader’s bad decisions.
“A notable 57% of beauty salons said they couldn’t make rent as well as 45% of gyms, 44% of retail and 44% of restaurants.” https://t.co/jOItHRY97q
— Rep. Marjorie Taylor Greene🇺🇸 (@RepMTG) November 26, 2022
These reports come at a time where consumer spending should normally be flowing. The fourth quarter of the year includes Black Friday and holiday shopping for the Christmas season. If consumers choose to shop local, this could a step in the right direction for small business. However, if consumers decide to be more price-conscious, they may direct their spending toward large retailers who can offer lower prices.
The Biden administration’s policies have certainly contributed to the historically high inflation, causing some to label it “Bidenflation”. The policies that have exacerbated inflation include exorbitant fiscal spending and disastrous anti-fossil fuel policies that have curbed domestic production.
Biden was handed an economy that was slowly reopening from lockdowns. The U.S. had already been pumped with stimulus both from the federal government and through low interest rates that were at zero. The additional spending from Biden only added more stimulus to a red-hot economy with dislocated supply chains, making inflation a lot worse.
Furthermore, gas prices have been climbing ever since Biden took office in January 2021, predating the war in Ukraine. This timeline heavily correlates with Biden’s “green energy” policies. So, it isn’t entirely “Putin’s price hike” as Biden has called it. While there was a significant disruption in the global oil markets from the war in Ukraine, the U.S. would have been much more insulated from the spike in energy prices if we promoted domestic production of fossil fuels.
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